The CEO wanted to have a loyalty program so I got assigned the task of starting one. I went ahead and ordered 200,000 cards that we can give out to our customers as loyalty cards when they register to our loyalty program.
That story was told to me by the operation manager of a big brand that was going through global expansion. He was asked to setup a loyalty program globally and the first thing he knew about the subject is that he needed loyalty cards. You don’t need a crystal ball to predict how this program will do.
Unfortunately I have heard different versions of the same story from different business managers. One marketing executive told me that they had all the plans ready for a customer loyalty program and about to start executing only to be stopped by the head of IT who assured everyone that his team can setup a loyalty program by simply installing the loyalty module that comes with their Point of Sale system. One year later and there was still no loyalty program.
In general, loyalty programs are often developed with good intentions; however, businesses struggle to understand where to start and who should be driving the customer loyalty journey. The challenge is raised by the fact that customer loyalty dynamics have changed dramatically through the years and so when some businesses try to implement a program they tend to do it based on knowledge that is outdated and with an unprepared team, which results in the over-simplification of the customer loyalty initiative by looking at customer loyalty simply as points/rewards and loyalty cards and eventually causes their whole initiative to fail before it even launches.
Rewards have evolved in the marketplace from being a nice little extra for one’s loyalty to being perceived as an entitlement. Also one of the major shifts in customer loyalty is that consumers have moved away, to a certain level, from a desire for possessions to a desire for experiences. In other words, consumers are looking for a meaningful relationship with the business, which includes value and relevance.
As a result of this shift in consumer attitude, retailers recognized that without a proper “customer identification tool,” they were unable to recognize individual customers and reward them for desired behavior. They realized that to the most part what they had is “sales” data while what they needed now is “customer” data and so the traditional model of loyalty that is based solely on points and rewards is no longer sufficient.
The rising tide of expectations necessitates that loyalty marketers develop truly innovative loyalty programs, utilizing loyalty marketing best practices. So businesses need to keep in mind the question of how the program can tap into not only changing lifestyles, but also changing attitudes. The answer is not just in the rewards catalog, but in understanding the fundamentals of loyalty marketing as many confuse “loyalty” with “rewards.” This is a fundamental mistake of many businesses and marketers today.
Too many businesses take shortcuts and jump to platform selection or program execution without any “internal” preparation first. Compare the two stories I mentioned at the beginning to a meeting I had with the managing director of a well-established brand and her team. The managing director had requested her accountant along with her operation managers to give her a detailed report about their customers, their average spending, their average visits, etc. So when we got to the meeting she had a clear idea about what they had, the challenges, and where they need to be.
She hired a marketing manager responsible for working with UrbanBuz on “designing” and managing the customer loyalty program and at the same time brought in her operations managers to make sure they fully understand the program and provide feedback as they were responsible for “executing” the loyalty program with their staff on the ground. The IT team was not even in the room.
So before you even start thinking about how and what you need to do to setup a loyalty program, you, as a business executive, need to first figure out who will be driving the program. Most important of all, is top management (starting with the CEO), need to have full commitment to the initiative otherwise the rest of the teams will struggle to make this a success.
Customer loyalty is not a task and certainly not an IT project; it is a business strategy that should be at the core of your marketing team’s strategy. Having said that, the marketing or customer loyalty team is only in charge of designing and managing the program to maintain the analytics to understand what customers are thinking and analyze the information. They also have to deliver the understanding, and help, and coach the rest of the organization.
When it comes to executing the program, it falls on the shoulders of the operations team. Those are the ones dealing with the customers day after day on the ground so it is up to them to really drive the strategy designed by the customer loyalty team and make it a reality.